Overview

Abu Dhabi’s ADGM Foundation is a legal entity established under the ‘ADGM Foundations Regulations 2017’, and was designed as a hybrid between a company and a trust. It has no shareholders or members, but it possesses an independent legal personality. A Founder establishes the foundation and transfers assets to it, which the foundation then owns and manages separately from the founder’s personal estate. The foundation is managed by a council, similar to a board of directors. It offers a flexible vehicle for wealth management, succession planning, and asset protection under a common law framework based on English law principles, tailored to the UAE.

Use Cases
ADGM Foundations are versatile and can be used for various purposes, including:

Wealth management and preservation

The ADGM Foundation suits well for protecting assets like real estate, shares, or investment portfolios across jurisdictions.

Succession planning

Ensuring smooth transfer of family wealth or business ownership without the complexities of inheritance, probate or forced heirship (automatic inheritance) laws.

Asset protection

Shielding assets from creditors, bankruptcy claims, or personal disputes.

Corporate Structuring

Holding shares in operating companies or special purpose vehicles in order to isolate risk or for investment purposes.

Philanthropic goals

For philanthropic management the ADGM Foundation works well too. It allows you to manage charitable initiatives, without the need for further structures.!

Family Business Continuity

Legacy planning for family-run enterprises, possibly complying with Sharia laws if structured appropriately.

Tax Status

As of June 1, 2023, the UAE imposes a federal Corporate Tax (CT) of 9% on taxable income exceeding AED 375,000. ADGM foundations, being juridical persons established under UAE law, are considered taxable persons and are subject to this tax.​
However, an ADGM foundation may apply to be treated as an "Unincorporated Partnership" for tax purposes, effectively rendering it tax-transparent. To qualify, the foundation must:​

• Be established for the benefit of identifiable natural persons or public benefit entities.​
• Primarily manage assets or funds related to savings or investments.
• Not engage in activities that would constitute a business if conducted directly by its founders or beneficiaries.​
• Not have tax avoidance as its principal purpose.​

If approved, the foundation itself is not taxed; instead, beneficiaries are taxed on their share of income, subject to applicable thresholds and exemptions.

Value Added Tax (VAT)

The UAE levies a standard VAT rate of 5% on most goods and services. ADGM foundations are subject to VAT if they engage in taxable activities and their annual taxable supplies exceed AED 375,000.​
For instance, if an ADGM foundation owns and leases commercial properties, it may be required to register for VAT and charge VAT on rental income.

Privacy

Privacy is a key feature of ADGM Foundations:
Confidentiality for the Beneficiaries: The identities of beneficiaries are are not disclosed publicly. Council Members. The identities of the Council Members are not publicly visible, which enhances privacy. Charter and By-Laws: While the Foundation’s Charter is filed publicly, the By-Laws—detailing internal governance, beneficiaries, and Founder powers—remain private. KYC details information may be disclosed to authorities if legally required for AML compliance, but sensitive data from KYC is visible only to the Registrar.

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Nominees in the ADGM Foundation

Nominees can be used in an ADGM Foundation in an administrative role, but as there are no shareholders. Nominees may be used as council members or as a guardian and can also be a way to bring professional expertise to the council.

Onboarding

Setting up an ADGM Foundation will require the following:
A Founder. At least one Founder is needed and residency in the UAE is not required.

A Foundation Charter must be drawn up, setting out objectives, assets, and duration and internal laws. Assets such as cash, property, or shares must be endowed to the foundation.

A Council comprising of a minimum of two Council Members must be appointed to manage the foundation. There are no residency restrictions and council members are legally bound to fulfill their duties in the foundation’s best interests.

A foundation must appoint a registered agent, licensed in the ADGM. This person is the central link between the foundation and the authorities.
Office location. If no physical office is maintained, a licensed ADGM registered agent can be the point of contact.

The registration of the ADGM Foundation will be handled by Otonomos which will assist with filing the company and obtaining the registered agent.

KYC Verification Process

ADGM complies with Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) regulations.
KYC checks require identification documents such as a passport, or ID card if applicable, proof of address, and source of wealth/funds for the Founder and Council Members. Beneficiary identities are confidential, but their details may be collected for AML compliance and held by the Registrar or registered agent. The ADGM Financial Services Regulatory Authority (FSRA) ensures compliance with international KYC standards, with documentation typically dated within three months of submission. Otonomos will to assist you with the process of KYC and identifying suitable supporting documentation.

Entity Maintenance

There are minimal ongoing requirements to maintaining an ADGM Foundation.
The process is mainly to confirm the entity’s details, documentation is only required to accompany any changes in personnel or address.

All requirements and renewal payments can be processed through the Otonomos Dashboard.

Renewal Periods

An ADGM Foundation must renew its registration annually with the ADGM Registration Authority.

Reporting

Reporting obligations are light compared to other jurisdictions.
There are no annual accounts to file. Adequate financial records must be kept , but there is no mandatory annual filing or audit. The Registrar may request records or audits if compliance concerns arise. If personal data is processed, ADGM Data Protection Regulations 2021 is required including an annual renewal of adherence.

Shutting Down Your Entity

Dissolving an ADGM foundation follows a clear process, Otonomos will assist with this process. The Foundation’s council must agree to dissolve the foundation, based on its charter and by laws. Remaining assets are distributed to beneficiaries or to a designated entity.
Application to Registrar: A dissolution application is submitted to the registrar, including a statement of solvency and confirming there are no outstanding liabilities. A published notice may be required to allow creditors to raise claims. Upon approval, the Foundation is struck off the register, ceasing to exist legally.